This Week With Financial Blunders: Chocolate Wars and More - Quicken Loans Zing BlogWe’re only a month in, but 2015 has already proved to be quite an exciting year. Hackers, freedom of speech, and business on the hill seem to be dominating the news consistently, but that doesn’t mean there isn’t more. It’s important we pan for gold and search for the financial news that can offer a much-needed palate cleanser from the stuff you see on 24/7 networks. So take a dive with us into This Week in Financial Blunders and see what you’ve missed.

Chocolate Pain

Hershey Co., a company synonymous with chocolate in the United States, has taken legal action to stop Cadbury, a company synonymous with chocolate in the United Kingdom, from importing their delicious chocolates to the states. The story was first reported by Tatiana Schlossberg of The New York Times after Hershey’s and a company called Let’s Buy British Imports (L.B.B.) reached a settlement. In the settlement, L.B.B. agreed to stop importing Cadbury goods that are made overseas. The reasoning? By importing these British-made goods, L.B.B. and similar companies were infringing on Hershey’s trademarks.

Jeff Beckman, a rep from Hershey’s, had this to say in the article: “It is important for Hershey to protect its trademark rights and to prevent consumers from being confused or misled when they see a product name or product package that is confusingly similar to a Hershey name or trade dress.” Those at Hershey’s are worried the Cadbury packaging is too similar to theirs; Toffee Crisps allegedly look too much like Reese’s Peanut Butter Cups, and they claim other sweets “infringe” on long-existing Hershey’s products.

Hershey’s has a licensing agreement to produce Cadbury chocolate in America using a different recipe – a decision that is upsetting many fans of the British chocolate. They have a legitimate reason to be upset too: British-made Cadbury chocolate has milk as its primary ingredient and, subsequently, a higher fat content. The American-made Cadbury has sugar as its primary ingredient and also includes preservatives to prolong shelf life. No word yet on whether this will be the new standard for American Cadbury chocolate or if the import block will be lifted.

Sky Bankrupt Sky

If you’re a fan of looking at knickknacks and tchotchkes, you’ll be upset to hear SkyMall has filed for bankruptcy. The iconic in-flight magazine was known for selling ridiculous products that no one actually needs; products like a wine glass-holder necklace, a day-of-the week clock and an attachable scooter for your luggage barely scrape the surface of what they had to offer.

How did a magazine full of awesome things like Orbitwheels go out of business? It’s like an airborne version of “Video Killed the Radio Star” – SkyMall’s interim chief executive said, “With increased use of electronic devices on planes, fewer people browsed the SkyMall in-flight catalog.” And that’s not to mention that many people can buy these crazy gifts on their website or the thousands of other sites on the Internet. In any case, the profits reported by SkyMall from the last two years show a startling decline. Skymall’s parent company, Xhibit Corporation, says the company “had revenue of about $33.7 million in 2013, but only $15.8 million for the nine months ended Sept. 28, 2014.”

If you’ve ever wondered how a catalogue of this goofy caliber stayed in business this long in the first place, you aren’t the only one. A former flight attendant turned Slate editor wrote a piece explaining how SkyMall actually made its money. Apparently SkyMall stopped being a direct retailer around 2013 and made its profits from “loyalty business.” Translation: 66% of their revenue came from three of their partners – Caesars Entertainment, Capital One and Marriott Rewards. As the article puts it, “By 2013, it earned more money by acting as a middle man for credit card companies and other partners: When a credit card holder spends enough money on a card, these reward programs allow you to redeem reward points for magazine subscriptions, cheap electronics, and other junk. SkyMall handled the fulfillment.”

$now$torm

If you’re reading this on the east coast, odds are you’re still digging yourself out of some snow – and hopefully your costs were just for salt and shovels. Buzzfeed Business wrote in great detail about how massive blizzards, like the one New England just had, can lead to costs in the billions. Here are a few remarkable points from the post:

  • Winter storms have cost an average of $1.2 billion in insurable losses every year for the past 20 years.
  • The cost of insurable losses from winter storms in 2014 was $2.5 billion, making 2014 the fourth costliest year of blizzards (in terms of insurable losses).
  • Despite the high costs of winter storms, hurricanes, droughts, severe local storms and non-tropical floods cost more on average.
  • Storms can have costly-long term effects – the following days are typically very slow for businesses. The Bureau of Labor Statistics says people typically miss the most work during December, January and February.

That’s all the blunders we have fit to print for this week, but if you have additional stories you’d like to discuss, please comment below.

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